Investment suggestion: pay attention to the leading enterprises with strong competitiveness + the link of accelerating the penetration of new technologies
In 2023, the sales of new energy vehicles will meet and slightly exceed expectations, but the performance of lithium batteries in the midstream will be poor, mainly due to:
1) In 2023, the industry will destock, resulting in the growth rate of lithium battery demand being lower than that of vehicles, and the actual midstream demand is poor, lower than expected at the beginning of the year.
2) The industry has serious overcapacity and poor demand, which triggers the industry's price reduction and involution, resulting in a significant decline in profitability and even losses in some links.
Core issues** and future prospects
Why does the prosperity of the battery material sector deviate from the downstream vehicle end in 2023?
From the perspective of domestic sales, the year-on-year growth rate of new energy vehicle sales in the first three quarters of 2023 is close to 40%, and from the perspective of midstream growth, the growth rate of batteries, negative electrodes, and separators is lower than the growth rate of the vehicle end, and the growth rate of the positive electrode and electrolyte is close to the growth rate of the vehicle end.
From the perspective of global production, the year-on-year growth rate of the vehicle end in the first three quarters of 2023 will be about 39%, except for the growth rate of iron and lithium (structural change - squeezing the ternary market), which is higher than the growth rate of the vehicle end, the growth rate of the vehicle end is significantly lower than that of the vehicle end.
Battery demand = bicycle capacity * (vehicle terminal sales - vehicle inventory), so the bicycle capacity and inventory are analyzed one by one.
*The reason why the demand of the vehicle side and the battery side is not synchronized: or the power and inventory for the bicycle.
In 2022, the sales volume of the vehicle end will basically match the installed capacity of the power battery, and the growth rate of the sales volume of the vehicle end in 2023 will be higher than the growth rate of the installed capacity, and there may be two influencing factors: 1) the power of the single vehicle; 2) Inventory.
Compared with the growth rate of downstream sales and midstream installed capacity in 2022, the gap between the cumulative growth rate of power battery installed capacity and the cumulative growth rate of downstream vehicle sales from the beginning of the year to the end of the year is shrinking (because the industry practice is to destock at the end of the year, December is not considered), and there is basically no growth rate difference by November. And from the year-on-year growth rate of the month, the growth rate of the power battery end is higher than the growth rate of the vehicle end in some months. Compared with the growth rate of downstream sales and midstream installed capacity in 2023, the gap between the cumulative growth rate of power battery installed capacity and the cumulative growth rate of downstream vehicle sales is expanding. And from the year-on-year growth rate of the month, the year-on-year growth rate of car sales in most months is higher than the growth rate of installed capacity.
Despite the increase in the proportion of plug-in hybrids, the amount of electricity carried by bicycles from January to November this year is still increasing year-on-year.
The change in the sales structure this year - the increase in the proportion of plug-in hybrid vehicles did not lead to a decrease in the electrification of bicycles, but because the electrification of plug-in hybrid and pure electric vehicles has increased, the electrification of the plug-in hybrid and pure electric vehicles has increased slightly year-on-year. According to the statistics of the Passenger Association, the proportion of plug-in hybrids from January to November 2023 will increase to 31%, an increase of 8pct compared with the whole year of 2022. However, in 2023 compared with 2022 month by month, whether it is pure electric or plug-in hybrid, the power of its bicycle is increasing. From January to November 2023, the average charge is 472 degrees, 46 in the same period1 degree.
What is the degree of destocking at the current point in time, and when will the downstream see the demand for backup?
The core influencing factor is inventory, which is divided into three levels.
The amount of electricity charged by bicycles has increased year-on-year this year, so inventory is the core reason for the growth rate of battery demand this year. Inventory analysis is divided into three levels: 1) vehicle inventory (car companies themselves + inventory pressed on dealers) - affecting the demand for power batteries and materials; 2) Power battery inventory (battery inventory that has not yet been installed by car companies + power battery companies' own inventory) - the former affects the demand for power batteries and materials; The latter affects material requirements; 3) Material inventory (power battery enterprises + material enterprises' own inventory) - the former affects material demand.
2022 From January to November 2023, 78.46 million new energy passenger vehicles were added.
Review history: From the inventory cycle of the past 4 years (2020-2023), 2020 will be destocked, 2021 will be replenished, but the overall inventory level is very low, and 2022-2023 will continue to replenish, although the new inventory level in 2023 will decline greatly compared with 2022, but the cumulative inventory level is still at a high level. According to the monthly output of the passenger association, the amount of risk - the export volume of the new inventory of the month is obtained. In 2020, the industry will be destocked, and the new inventory in 2021 will be 120,000 units, which is only 1 4 of the average monthly risk in 2022. Based on the cumulative inventory of 890,000 units in 2022, it is 15 times. From the year-end inventory and annual output, 2020, 2021, 2022, and 2023 are -2%, 4%, 12%, and 6% respectively.
Looking ahead: The vehicle inventory at the end of this year is expected to be twice the average monthly sales volume next year, at the highest level in the past four years, and there will still be some inventory pressure next year. Considering that the cumulative inventory in 2023 will be 1.35 million units, according to the China Automobile Association's ** new energy vehicle sales growth rate is expected to be 22% next year, the insured volume next year is expected to be 8.86 million units, with a monthly average of 740,000 units, and the current inventory is about 1 of the average monthly insured volume next year8 times, there is still pressure on inventory. We expect inventory production to remain low next year.
With the expectation that lithium prices will not have much room to fall, what is the outlook for future earnings?
Outlook for 2024: We are optimistic about two directions:
1) Leading enterprises with strong competitiveness;
2) The accelerated penetration of new technologies, especially fast charging.
Leading enterprises with strong competitiveness: the industry is still in a state of overcapacity, but in the first half of 2023, we can see the widening of the profit gap between the first and second lines, and the second and third lines are already in a loss. In addition, lithium battery companies have successively released equity incentive targets, and the future growth expectations are gradually clear, indicating that leading companies have confidence in clearing the industry and stabilizing subsequent profits. It is recommended to focus on [CATL], [EVE Lithium Energy], [Shangtai Technology], [Tianci Materials], [Kedali], and [Dingsheng New Materials].
The direction of accelerating the penetration of new technologies: 1) leading companies have launched 4C iron-lithium fast charging to accelerate the penetration rate of fast charging, and pay attention to the second-generation silicon carbon anode; In addition, the coating method has changed: single-layer and double-layer coating bring an increase in unit value; 2) Lithium manganese iron may be applied to the facelift Tesla, in August 2023, the Ministry of Industry and Information Technology announced Chery's 4 lithium manganese iron models, lithium manganese iron has no doubts about getting on the car, and the follow-up technology iteration, from mixed use to pure use, the amount is expected to increase significantly. 3) Battery insulation coating: better performance and safer + lower cost, used to replace blue film. It is recommended to focus on [Yuanli shares], [German nano], [Matsui shares], [Mannster], and [Jiaocheng ultrasound].
This is an abridged excerpt from the report, the original PDF of the report
Electrical Equipment-2024 New Energy Industry Strategy Lithium Battery: Countdown to Storage, Industrial Inflection Point is Coming-Guohai**-20240131[Page 25]".
Report**: Value Catalog